Micron Technology, Inc.

About Micron Technology, Inc.

Micron Technology is one of the largest memory chip makers in
the world. It makes DRAM (Dynamic Random Access Memory), NAND
Flash, and NOR Flash memory, and other memory technologies. The
company sells to customers in networking and storage, consumer
electronics, solid-state drives, and mobile telecommunications, but
its largest concentration (nearly a third of sales) is the computer
market. Micron's products are offered under the Micron, Lexar,
Crucial, SpecTek, and Elpida brands, as well as private labels. The
company generates about 85% of sales internationally.

Operations

Micron operates through four segments centered on its markets.
Its largest, accounting for more than 40% of sales, is the Compute
and Networking Business Unit, which sells products for the
computing, networking, graphics, and cloud server markets. The
Storage Business Unit contributes more than 20% of revenue with the
Mobile Business Unit, memory for smartphone, tablet, and other
mobile-device markets, generating more than 20% of sales. About 15%
of revenue comes from the Embedded Business Unit, which makes
memory products for the automotive, industrial, and consumer
markets.

Almost two-thirds of revenue comes from DRAM products and NAND
Flash memory products supply the rest. DRAM and flash are sold
throughout each of Micron's segments.

The company makes its own products in fabrication plants
throughout the world and most of its products are made on 300mm
wafers.

Geographic Reach

Micron generates about 50% of its revenue in China with another
25% from Taiwan, Japan, and other Asia/Pacific region countries.
The US and Europe contribute about 15% and 5%, respectively.

It has fabrication and assembly facilities in China, Japan,
Malaysia, Singapore, Taiwan, and the US.

Sales and Marketing

Micron sells to equipment manufacturers and retailers via a
direct sales force, third-party sales representatives, and
distributors. The company sells Lexar-branded NAND Flash memory
products primarily through retail channels and its Crucial-branded
products through a web-based customer direct sales channel as well
as through channel and distribution partners.

Intel is Micron's biggest customer, generating about 15% of
sales with sales to Kingston, primarily DRAM, amounting to a tenth
of sales.

Financial Performance

Micron's financial results over the past two years are Exhibit A
in the volatility of the semiconductor business. The company rode
increased demand to a 64% revenue increase, to about $20 billion,
in 2017 (ended September) from 2016. On the bottom line, the
company posted about $5 billion in net income, wiping about a $276
million loss in 2016. Revenue and profit were company records.

Micron reported strong conditions across its markets,
particularly for enterprise, mobile, client, and SSD storage. The
company recorded higher sales in all operating segments and
significant sales volume increases for DRAM and Trade NAND products
as well higher prices for DRAM products. Output was aided by
improvements in product and process technology.

The improvements in manufacturing and revenue translated to the
leap in net income. The 25% profit margin in 2017 was the highest
in at least a decade.

Micron generated plenty of cash in 2017, hitting more than $8
billion in operating cash flow, upo from about $3 billion in 2016.
Cash came from operations and the effect of working capital
adjustments.

Strategy

Changes Micron made to improve its manufacturing processes and
to alter its product mix met the market at the right time. The
company's memory products are selling into growing markets such as
cloud computing, data centers, and automotive applications. That
has increased demand. At the same time, Micron increased its pace
of production and made it more efficient with changes to its
development and fabrication processes. That enabled it to sell at
higher prices for some products and gather market share from slower
competitors.

Mergers and Acquisitions

In 2016 Micron acquired the two-thirds of Inotera that it did
not own. Micron paid $4 billion to Nanya Technology Corp. for the
DRAM maker based in Taiwan. The deal brought Inotera's DRAM
production entirely in-house at Micron, which already buys 100% of
Inotera's output. Most of Inotera's manufacturing operations run at
Micron's 20 nanometer process with the rest to convert in 2016.